Inchcape has dropped its dividend and bosses are cutting their salary and fees as it reacts to the financial impact of the coronavirus pandemic.
In a business update issued via the London Stock Exchange this morning, the car dealership business – which made a pre-tax profit of £402m last year – said trading in a ‘large number’ of its markets had been affected ‘by closures or significantly lower business activity’ because of Covid-19.
Fourteen markets across the world are still operating, though, including Hong Kong, Australia and Ethiopia.
Inchcape said it had ‘taken swift action to reduce discretionary costs and capex [capital expenditure]’, with the board not only no longer recommending payment of the previously announced final divided of 17.9p per ordinary share but the board and senior also agreeing to a 20 per cent cut in their salary and fees over the second quarter of the year ‘to help support the business’.
In the update, it stated: ‘The safety of our colleagues and customers is of paramount importance and we are taking all necessary precautions to safeguard them… Looking beyond the current environment, we believe Inchcape remains well placed given our strong relationships with OEM partners, focus on distribution, exposure to markets with a structural growth opportunity and supported by a strong balance sheet.’
It said it had £600m of liquidity, adding that it was ‘comfortable that we have sufficient financial resources to navigate an extended period of disruption’.
Among its actions, Inchcape is also extending payment terms.
Shares in the company were up by nearly eight per cent at 470.6p in this morning’s trading following the announcement.
A trading update will be published on May 21.